Telegram-linked cryptocurrency Toncoin loses $2.7 billion after Telegram co-founder Pavel Durov’s arrest in Paris

Toncoin, a cryptocurrency linked to Telegram Messenger LLP, lost about $2.7 billion in market value on Monday after the French police arrested the messaging app's co-founder, Pavel Durov, at an airport near Paris on Saturday evening.

One of the top ten rivals to cryptocurrency Bitcoin, Toncoin suddenly fell, with prices crashing to around 20%, following Durov's arrest. The police arrested the Telegram CEO at Le Bourget airport for alleged offences related to his popular messaging app. France's OMFIN, an office tasked with preventing violence against minors, has accused Durov of failing to take action to curb the criminal use of his platform, reported AFP.

Despite the 10th largest crypto asset trading at $5.69 as of 10:36 am Monday in Singapore, it remains down 16%, a drop traced to Pavel Durov's arrest, according to data compiled by Bloomberg.

Toncoin and Telegram

Toncoin, previously known as Gram, is a native cryptocurrency of the TON network. As of August 26, 2024, Toncoin (TON) has a market cap of $14.39 billion, according to Coinbase.

While Toncoin has said it is separate from Telegram, the ties between the two have transformed Telegram into one of crypto’s most-hyped initiatives. In May 2024, Pantera Capital, an American investment agency, described its purchase of Toincoin as the firm’s largest-ever investment.

Pavel Durov's arrest

Telegram responded to its CEO's arrest on X on Monday, stating that Durov has “nothing to hide.”

The messenger said it abides by EU laws and has nothing to hide, adding that it is “absurd” to hold a platform accountable for abuse by users.

It’s “too early to tell” what impact Durov’s detention will have on Telegram in the long term, said Richard Galvin, co-founder of hedge fund DACM, reported Bloomberg. In early 2023, DACM purchased TON tokens in a private round.

Galvin further highlighted that the TON-Telegram relationship's biggest appeal was to drive Telegram's vast user base to crypto functionality. Amid such a backdrop, “anything that weakens the competitive position of Telegram is negative for TON,” stated Galvin, reported Bloomberg.

TON, on its X account, joined Elon Musk in expressing support for Durov, reposting the hashtags #FreePavel and #FREEDUROV and changing its logo to the “Resistance Dog”, showing support.

Telegram aims to reach one billion

Telegram is ranked among the major social media platforms after Facebook, YouTube, WhatsApp, Instagram, TikTok, and WeChat and aims to reach one billion users next year.

Telegram, based in Dubai, was founded by Russian-born Durov. Forbes estimates Durov's worth at $15.5 billion. He left Russia in 2014 after refusing to comply with the government's demands to shut down opposition communities on the platform.